Trade War Fears Hammer Greenback: Euro and Swiss Franc Soar on Tariff Threats

The US Dollar faced broad-based selling pressure on Monday, surrendering key levels against European counterparts as geopolitical tensions between Washington and its European allies intensified. The catalyst for the move was President Donald Trump's renewed demand for the purchase of Greenland, accompanied by a severe threat to impose 25% tariffs on Denmark, France, and the United Kingdom.

EUR/USD Breaks 1.1600

The single currency capitalized on the Dollar's weakness, snapping a four-day losing streak to trade around 1.1625 during the European session. Markets are rapidly pricing in a deteriorating trade environment, with European leaders signaling they will not back down. Reports indicate the EU is preparing a “nuclear” economic response, including a retaliatory tariff list worth hundreds of billions of dollars.

Safe-Haven Inflows Boost Swiss Franc

In a classic flight-to-safety move, the Swiss Franc outperformed significantly. The USD/CHF pair plummeted by 0.55%, breaking below the psychological 0.8000 handle to trade near 0.7985. The breakdown reflects deep market anxiety that the diplomatic spat could escalate into a full-blown trade war, undermining global growth prospects and isolating the US economy.

Key Market Data

• Proposed Tariff: 25%
• EUR/USD Spot: 1.1625
• USD/CHF Spot: 0.7985
• USD/CHF Change: -0.55%
• Key Support Broken: 0.8000

Analyst View

Market participants are now closely watching for official responses from the French and UK governments. If the EU activates its anti-coercion instruments, volatility in the major pairs is expected to expand further, with the Dollar potentially facing prolonged headwinds.